TTPD: Seller beware of scams using IRS Form 1099-A for large purchases

TEXARKANA, Texas (KTAL/KMSS) – Texarkana police are warning the public to beware of a scheme to make fraudulent purchases for large amounts using a tax form.

According to police, a potential customer will walk into a business to make a purchase – usually an expensive item like a car or major appliance.

When it’s time to discuss payment, the scammer gives the company a completed IRS Form 1099-A, indicating that he has a huge amount of money in a government trust.

According to police, the scheme only works if the scammer is able to convince the company that they can submit the form and that the government will make payment directly from the buyer’s social security fund. They present the form as a currency that works like a third party check.

To entice reluctant businesses with a better deal, the buyer will offer to pay 5% of the purchase price as a bonus for accepting the 1099-A.

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Texarkana police said they contacted an area tax professional who told them that was not how 1099-A forms worked.

“A local tax expert told us: ‘This is crazy shit! It’s completely absurd. These forms are used by banks and auto lenders when you default on a loan and end up having to reclaim the outstanding balance as income on your tax return. No unsuspecting company or individual needs to get caught up in this.

TTPD says this program is clever and persuasive, and they urge local businesses not to take the bait. Any company that falls into the trap will end up with the bag. Any business owner or big ticket seller should notify the police immediately.

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